How to claim travel expenses

Work-related travel might be something as simple as a short trip to see a client for an hour or two or a prolonged trip lasting several days interstate or even overseas.

H&R Block Tasmanian manager Steve Hinton said the costs which you incur in travelling for work were generally tax deductible.

“The law in this area is very complex though and the Australian Taxation Office (ATO) regularly keeps a close eye on people making correct travel claims, so it pays to take care to get it right,” he said.

Using your car for work

If you are required to use your car for work, you may be entitled to a deduction for the costs that you incur while at work.

This specifically excludes the cost of the commute from home to work, except in very limited circumstances.

Typical situations where you might be able to claim for using your car for work include:

Travelling between workplace sites during the working day.

Travelling directly from one job to another where you have a second job, provided you don’t go home first.

Travelling to a business related meeting with a client, supplier or prospect.

Travelling to a work-related course.

There are two ways you can make this claim:

Cents per kilometre:

You can claim a flat rate of 66 cents per kilometre for every business kilometre you cover.

You’ll need to keep a diary of all work-related journeys so you can work out how many kilometres you’ve travelled for work.

This method can only be used for claims up to 5000 kilometres per vehicle.

If you change your car part way through the year, you can claim 5000 kilometres for both vehicles.

Generally, if you travel more than 5000 kilometres per year for business in a particular vehicle, you may be better off to use the logbook method.

Logbook:

This is a way of claiming the actual expenses you’ve incurred in running your vehicle for work such as fuel, servicing, insurance and depreciation.

Deduction claims usually work out larger using the logbook method, but the record-keeping requirements are more onerous.

For a start, you’ll need to keep a logbook – but only for a representative 12-week period.

In the logbook, you will need to record all your business journeys so that at the end of the logbook period you can work out the proportion of business use for your vehicle.

That proportion can then be applied to all your car expenses over the year, and over the next four-years too as the logbook is good for five-years, providing your travel patterns do not change.

Then you will need to keep records – such as receipts or invoices – for everything you spend on your motor vehicle, so you can claim the appropriate business percentage of that expense when you come to complete your tax return.

You can’t claim a deduction for home to work travel, this is regarded as private expenditure.

The only exception to that rule is if you are required by your employer to carry bulky tools in your vehicle that cannot be safely secured at work.

Take great care on that point – the ATO looks very closely at such claims and disallows lots of them.

Other travel expenses

To the extent you incur a cost that isn’t reimbursed by your employer, there are lots of other items you can claim.

Remember, all these must be work-related and must not be connected to your journey from home to work.

These include:

Bridge/tunnel tolls.

Public transport fares.

Airfares.

Car parking.

Taxi fares.

You cannot claim the cost of fines for speeding, parking infringements or other motoring offences.

Overnight meals and accommodation

If you are required to travel away from home overnight for work purposes, you can claim a deduction for any meals, accommodation or incidental expenses that you incur to the extent you are not reimbursed by your employer.

Some people who travel extensively are paid an allowance by their employer to cover those costs.

Those allowances are taxable but a deduction can then be claimed for costs incurred.

Each year, the ATO publishes lengthy lists of what it regards as reasonable amounts to spend on meals, accommodation and incidentals incurred on overnight trips.

Provided you’ve received an allowance from your employer and you’ve claimed less than the amounts specified by the ATO, you do not need to keep detailed records such as invoices and receipts.

If you spend more than the ATO’s reasonable amounts or you don’t get paid an allowance, you must keep detailed records.

Mr Hinton said this was an area that tripped up many people and that the ATO extensively audited these claims.

“Some people assume they can automatically claim the reasonable amounts specified by the ATO,” he said.

“That is not how it works, as you can only claim the amount you actually spent and the ATO reasonable amounts dictate whether or not you need to keep detailed records.

“Even if you haven’t kept detailed records and are not obliged to keep them because of the exemption, you still need to be able to prove that you incurred the expense.

“That could involve keeping credit card statements or being able to prove that you were in a particular place at a particular time.”

In what other situations can I claim travel deductions?

As well as work-related travel, you might also be able to claim travel in the following situations:

When you attend a work related course or conference. If the conference is local, you can claim mileage or transport costs. If the course is interstate or overseas, you can claim airfares, accommodation and meals.

Visiting a residential investment property. You can claim for inspection trips to visit your rental property, but only until 30 June 2016. Under new law proposed in the last Federal Budget, such claims cannot be made for trips from 1 July 2017 onwards.

Visiting a tax agent. When you get your tax return done or visit your agent for tax advice, the fee you pay is tax deductible and, in addition, you can also claim any related travel expenses.